The Bitcoin Foundation is Effectively Bankrupt

The Bitcoin Foundation is Effectively Bankrupt

Many people are familiar with the cryptocurrency Bitcoin, but it is unlikely that most people have heard of the Bitcoin Foundation. This non-profit organization describes themselves saying, "We fund development of Bitcoin Core and create new avenues for people to participate in the Bitcoin project." The group has, in the past, organized a Bitcoin conference and hired lobbyists and developers.

Olivier Janssens, a member of the Bitcoin Foundation board of directors, published information on the foundation's forum about some of the inner-workings of the organization. He started with a rather shocking claim: "the Bitcoin Foundation is effectively bankrupt."

As a member of the board, part of his responsibility is to manage the group so that something like this doesn't happen. So, what that, what did happen? According to Janssens,

As a result of 2 years of ridiculous spending and poorly thought out decisions, they almost ran out of money in November of last year. In extremis, but way too late, they decided to select a new executive director during that time. That new director decided that the only way to still get funds at that point, was to focus solely on funding core development, in the hope that people would see that as a good cause. But people were smart enough not to trust the Foundation anymore. Despite it's intentions, they failed to collect the necessary funds to support this idea. With the election in February-March, it became clear that people did not want the Foundation meddling with core development. The truth is that the Foundation's plan was to hire even more core devs + to start a Bitcoin Standards Body. No organization should have this much control over Bitcoin, and a disaster was avoided.

The organization fired 90% of its employees and converted some to volunteers. The problem with volunteers, however, is that projects like this always take a back burner position to the thing that makes them money. The Executive Director is leaving the organization within 2 weeks time and will found a new organization with a new name to try and continue on the work without the tarnish of the current brand.

Within a short period of time, two additional board members, including the Executive Director, have refuted the claims. ED Patrick Murck said,

The foundation is not bankrupt, but a restructuring is needed. Olivier basically jumped in front of our announcements on that and our annual report on the 2014 finances to be released next week, and he spun it very very negative.

It is no surprise that the Foundation is in a situation of controversy - they are not new to this scenario. A founding member was involved with Silk Road and another was involved in the collapse of MtGox. A refactored foundation will not solve the problem, and neither will a new group founded by the same people. The biggest issue is figuring out what the real problem here is.